Smurfit Kappa can get better mix of paper and pulp 7 Mar 2018 The Irish packaging group rejected International Paper’s approach despite a 27 pct premium. The U.S. suitor will need to offer more cash to tempt investors, but is restrained by high debt. With targets scarce at home, though, the lure of a European foothold may be worth the risk.
Smurfit Kappa takeover is difficult to repackage 6 Mar 2018 The Irish company rejected an unspecified cash-and-stock approach from U.S. rival International Paper. Similar deals suggest the buyer may have to pay up to 40 euros per share to get a hearing. But a cash deal would stretch leverage, while Smurfit investors are wary of U.S. stock.
Cowed LafargeHolcim sets sights appropriately low 2 Mar 2018 The new boss of the world’s largest cement maker has scrapped a share buyback and set the group’s EBITDA growth target at 5 pct. Jan Jenisch can probably do better. Still, given LafargeHolcim’s various headaches since its merger the conservatism is understandable.
General Electric brings more bad things to light 26 Feb 2018 The $125 bln conglomerate keeps finding skeletons in its closets. A $4.2 bln charge to better account for service contracts was expected; less so are revelations GE Capital inflated its earnings. CEO John Flannery’s overdue cleanup is exposing flaws throughout the weakened giant.
Siemens’ $50 bln IPO may be first step to breakup 19 Feb 2018 The German industrial giant’s shares could be worth 25 pct more if a sale of its healthcare unit lifts a conglomerate discount. But investors may still balk at owning a company with listed stakes in disparate sectors like wind and rail. In that case, calls for a breakup may grow.
Airbus’s sunnier skies still contain clouds 15 Feb 2018 Shares in the aerospace giant jumped by one-tenth on Thursday following an 8 percent rise in operating profit, higher than analysts expected. But its operating margin still lags those of U.S. rival Boeing. Closing the gap could be complicated by a fresh stateside corruption probe.
Boeing in-sourcing idea fires on two engines 8 Feb 2018 Even as it negotiates with Embraer, the $207 bln company is in talks to buy parts supplier Woodward, the WSJ reports. With a seven-year backlog of plane orders, Boeing could raise profitability by bringing more work in-house. Plus, it could throw sand in rival Airbus’s engines.
Hadas: Tesla’s $60 billion mistake on pay 31 Jan 2018 The loss-making electric-car maker could hand founding genius Elon Musk that much if all goes miraculously well. The hero-worship approach to compensation made some sense when Tesla was more concept than manufacturer. What it needs now is more boring and bureaucratic competence.
Bull market lets activists see virtue in passivity 26 Jan 2018 Bill Ackman, who lost his fight with ADP, has taken a stake in Nike but isn’t pushing for change. Dan Loeb sat back as Honeywell’s new boss ignored his advice and beat his targets anyway. Even pushy hedge funds can be tempted to simply ride the waves when a rally lifts all boats.
U.S. tax cuts pile on pressure for GE to shrink 24 Jan 2018 They should help, long term. But a big charge contributed to a whopping $9.8 bln fourth-quarter loss at the conglomerate, whose top line also declined. Cost cuts and cash-flow gains buy CEO John Flannery breathing room, but the breakup option is looming increasingly large.
ThyssenKrupp takes second step to redemption 19 Jan 2018 Having pooled its steel assets with rival Tata, the German industrial group plans a further strategy shift. Just as well: margins even in the non-steel bits lag peers. The question is how far CEO Heinrich Hiesinger can follow the vogue for dismantling big, unwieldy conglomerates.
China’s battery champion will charge overseas 19 Jan 2018 A $2 billion IPO would give CATL a richer valuation than rivals such as Samsung SDI. To justify that price, the battery maker must thrive at home and abroad. Cracking global supply chains is hard. But where other Chinese giants have stumbled overseas, CATL might just succeed.
Ford stock’s staying power makes no sense 17 Jan 2018 The Motown automaker expects costs and currencies to impede its earnings recovery. It also trails GM on autonomous cars and is having to double its electric-vehicle investments. Yet Ford trades at a higher multiple than its Michigan rival. GM's prospects look brighter.
GKN only needs half-baked defence to beat Melrose 17 Jan 2018 The serial acquirer has launched a $10 bln hostile bid for the UK engineering group. Melrose promises to boost margins and give its target’s shareholders 57 pct of the enlarged group. However, an independent GKN could create the same value by lifting profitability half as much.
GE’s legacy losses reinforce case for breakup 16 Jan 2018 A $6.2 bln charge relating to reinsurance - a business the company exited over a decade ago - shows the challenge of managing a conglomerate. CEO John Flannery is struggling to shrug off the past and turn to the future. At least he’s open-minded enough to consider a GE carve-up.
Melrose can engineer a higher price for GKN 15 Jan 2018 The acquisitive engineering group has had its 7 billion pound bid for ailing GKN rejected. It could hike its offer by over 10 percent and still double its money, according to Breakingviews estimates. That would be an acceptable return, but will require precision execution.
GKN breakup defence is still on drawing board 12 Jan 2018 The UK engineer grappling with an accounting scandal rejected a $9.5 bln offer from serial acquirer Melrose. Its alternative plan of splitting itself in two makes sense and could deliver more value. But investors need more proof it can fix its business, and a clearer timetable.
German economic success lays trap for Merkel 11 Jan 2018 The strongest growth in six years and the rude health of public finances may tempt a weakened Chancellor Angela Merkel into budget giveaways. But low interest payments flatter the fiscal picture and won’t endure. Better to invest in infrastructure and education than to cut taxes.
Continental would move to higher gear with breakup 9 Jan 2018 The $57 bln auto supplier is reportedly considering a business overhaul, including listing its tyres unit. That fits with a trend for breakups at auto groups, and would boost its valuation. The Schaeffler family, Continental’s largest shareholder, is a potential roadblock.
Boeing’s stealthy Embraer approach has big aims 2 Jan 2018 The U.S. aerospace giant is considering joint ventures with the Brazilian planemaker rather than a takeover bid. That’s smart. A lower altitude should allow it to sidestep political and financial turbulence while forging more extensive links than rivals Airbus and Bombardier.